SEC will not offer digital asset companies amnesty for self-reporting violations: report

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The U.S. securities watchdog has dismissed claims that it’s offering amnesty to digital asset firms that report their violations voluntarily. A top official at the Securities and Exchange Commission (SEC) said that while it may be more lenient on companies that self-report, they will still be liable to face penalties and other punitive measures.

In an interview with Reuters, SEC enforcement division’s director Gurbir Grewal clarified that the agency hasn’t given a free pass to digital asset firms who have been violating securities regulations for years, just because they come forward now.

Grewal, who joined the SEC in July 2021 after serving as the New Jersey Attorney General, told the outlet, “Our message to them is not, ‘Register your product and we’ll just ignore the billions you have under management in this crypto lending product and your violations of the securities laws.’”

However, companies that self-report stand a greater chance of having the regulator go easier on them as opposed to those who are busted by the watchdog.

“Our message is that we’ll view their conduct more favorably if they come in—such as what the remedies will look like, including penalties, and finding a path to complying with the securities laws. That’s the benefit entities get from self-reporting violations and working with us,” Grewal added.

Grewal’s clarification comes following a speech by Chairman Gary Gensler in which he called on digital asset firms to self-report before the regulator cracks down on them.

In his speech before the Senate Committee on Banking, Housing and Urban Affairs, Gensler said, “I’ve suggested that [crypto] platforms and projects come in and talk to us. Many platforms have dozens or hundreds of tokens on them. While each token’s legal status depends on its own facts and circumstances, the probability is quite remote that, with 50, 100, or 1,000 tokens, any given platform has zero securities.”

In the past few years, the SEC has taken different approaches towards dealing with digital asset-related firms that flout securities regulations. While some have just been fined and allowed to continue operating, others have been ordered to cease and desist.

Watch: SEC Commissioner Hester Peirce on Bitcoin Association’s Blockchain Policy Matters